 PENTAIR
PENTAIR’S PATH FORWARD
Electrical Products Group Conference
RANDALL J. HOGAN
Chairman and Chief Executive Officer
May 22, 2012
Filed by Pentair, Inc.
pursuant
to
Rule
425
under
the
Securities
Act
of
1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Pentair, Inc.
Registration Number: 333-181250 |
 PENTAIR
2
FORWARD-LOOKING STATEMENTS
Caution Concerning Forward-Looking Statements
This communication may contain certain statements about Pentair, Inc. (“Pentair”),
Tyco Flow Control International Ltd. (“Tyco Flow”) and Tyco International Ltd. (“Tyco”) that are “forward-looking
statements” within the meaning of the U.S. Private Securities Litigation Reform Act of
1995. The forward-looking statements contained in this press release may include statements about the
expected effects on Pentair, Tyco Flow and Tyco of the proposed merger of Pentair and Tyco
Flow (the “Merger”), the anticipated timing and benefits of the Merger, Pentair’s and Tyco Flow’s
anticipated standalone or combined financial results and all other statements in this document
other than historical facts. Without limitation, any statements preceded or followed by or that
include the
words “targets”, “plans”, “believes”, “expects”, “intends”, “will”, “likely”, “may”, “anticipates”, “estimates”, “projects”,
“should”, “would”, “expect”, “positioned”, “strategy”, “future” or
words, phrases or terms of similar substance or the negative thereof, are forward-looking
statements. These statements are based on the current expectations of the management of Pentair, Tyco
Flow and Tyco (as the case may be) and are subject to uncertainty and changes in circumstances
and involve risks and uncertainties that could cause actual results to differ materially from those
expressed or implied in such forward-looking statements. In addition, these statements are
based on a number of assumptions that are subject to change. Such risks, uncertainties and assumptions
include: the satisfaction of the conditions to the Merger and other risks related to the
completion of the Merger and actions related thereto; Pentair’s and Tyco’s ability to complete the Merger on
anticipated terms and schedule, including the ability to obtain shareholder or regulatory
approvals of the Merger and related transactions; risks relating to any unforeseen liabilities of Pentair or
Tyco Flow; future capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, losses and future prospects; business and management
strategies and the expansion and growth of Pentair's or Tyco Flow’s operations;
Pentair’s and Tyco Flow’s ability to integrate successfully after the Merger and achieve anticipated synergies; the
effects of government regulation on Pentair’s or Tyco Flow’s businesses; the risk
that disruptions from the transaction will harm Pentair’s or Tyco Flow’s business; Pentair’s, Tyco Flow’s and Tyco’s
plans, objectives, expectations and intentions generally; and other factors detailed in
Pentair’s and Tyco’s reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including their
Annual Reports on Form 10-K under the caption “Risk Factors”.
Forward-looking statements included herein are made as of the date hereof, and none of Pentair, Tyco Flow or Tyco undertakes any
obligation to update publicly such statements to reflect subsequent events or circumstances.
Additional Information
The Merger will be submitted to a vote of Pentair shareholders and the proposed distribution
of Tyco Flow to Tyco shareholders (the “Distribution”) will be submitted to a vote of Tyco shareholders.
On May 8, 2012, Tyco Flow filed with the SEC a registration statement on Form S-4
containing a preliminary proxy statement/prospectus regarding the Merger. On May 8, 2012, Tyco Flow filed with
the SEC a registration statement on Form S-1 containing a preliminary prospectus and Tyco
filed with the SEC a preliminary proxy statement regarding the Distribution. The preliminary proxy
statement/prospectus regarding the Merger, the preliminary prospectus regarding the
Distribution and the Tyco preliminary proxy statement are available free of charge on the SEC’s website at
www.sec.gov. Pentair plans to file with the SEC and mail to its shareholders a definitive
proxy statement regarding the Merger and Tyco plans to file with the SEC and mail to its shareholders a
definitive proxy statement regarding the Distribution. Shareholders are urged to read the Form
S-4 containing the preliminary proxy statement/prospectus, the Form S-1 containing the preliminary
prospectus and the Tyco preliminary proxy statement, which are available now, and the Form
S-4 containing the definitive proxy statement/prospectus regarding the Merger, the Form S-1
containing the definitive prospectus regarding the Distribution and the Tyco definitive
proxy statement and any other relevant documents when they become available, because they will contain
important information about Pentair, Tyco and Tyco Flow and the proposed transactions.
The definitive proxy statement/prospectus relating to the Merger, the definitive prospectus relating to the
Distribution, the Tyco definitive proxy statement and other documents relating to the proposed
transaction (when they are available) can be obtained free of charge from the SEC's website at
www.sec.gov. These documents (when they are available) can also be obtained free of charge
from Pentair upon written request to Investor Relations Department, Pentair, Inc., 5500 Wayzata Blvd.,
Suite 800, Minneapolis, MN, 55416, or by calling (763) 545-1730 or from Tyco or Tyco Flow
upon written request to Investor Relations Department, Tyco International Ltd., 9 Roszel Road, Princeton,
NJ, 08540, or by calling (609) 720-4200.
Participants in the Solicitation Pentair and Tyco and certain of their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from shareholders in connection with the proposed
transaction under the rules of the SEC. Information about the directors and executive officers
of Pentair may be found in its Annual Report on Form 10-K for the year ended December 31, 2011 filed
with the SEC on February 21, 2012, the definitive proxy statement relating to its 2012 annual
meeting of shareholders filed with the SEC on March 9, 2012 and Tyco Flow’s registration statement on
Form S-4 containing the preliminary proxy statement/prospectus relating to the Merger,
which was filed with the SEC on May 8, 2012. Information about the directors and executive officers of Tyco
may be found in its Annual Report on Form 10-K for the year ended September 30, 2011 filed
with the SEC on November 16, 2011, the definitive proxy statement relating to its 2012 annual general
meeting of shareholders filed with the SEC on January 13, 2012 and Tyco’s preliminary
proxy statement, which was filed with the SEC on May 8, 2012. These documents can be obtained free of
charge from the sources indicated above. Additional information regarding the interests of
these participants will also be included in the definitive proxy statements when it becomes available.
|
 PENTAIR
3
KEY MESSAGES
Positioning ‘New’
Pentair for Sustainable, Profitable Growth
Clear Strategic Roadmap
for Shareholder Value Creation
Integration Planning
Efforts Well Underway
High Confidence
in Deal Synergies and Long Term Targets
Pentair
and
Tyco
Flow
Control
…
Great
Fit |
 PENTAIR
4
A Decade of Positive Transformation
~
20%
of Sales
in Fast Growth
Region
~
5%
of Sales
in
Fast Growth
Regions
Acquired
~
$200M
in Tech Product
Sales
Today
Today
Early
Early
2000’s
2000’s
Mid-
Mid-
2000’s
2000’s
Sold Tools,
Acquired >$1B in
Water Revenues
Portfolio of ~25
Smaller Businesses;
Manufacturing
Oriented
Global Businesses,
More Solutions
Focused
Acquired A Leading
Membrane Technology
Company (May 2011)
Began Lean
Enterprise in
Tech Products
A HISTORY OF CHANGE
Announced Pending
Merger with
Tyco Flow Control
(March 2012)
Clear Strategic Roadmap |
 PENTAIR
5
2009
2010
2011
STRONG PERFORMANCE Pentair Standalone
2009
2010
2011
Adj.
ROS
*
9.6%
ROS
11.0%
$2.7
$3.0
Fast Growth Regions, Innovation & Op Excellence Key Drivers
•
8% Organic Growth, 2 Yr CAGR
-
Tech Products
+12%
-
Water & Fluid
+7%
w/ No Meaningful Residential
Market Recovery
•
PIMS Toolkit
-
Key Driver of 210 bps Op Margin
Expansion Over Past Two Years
-
Enabling
Increasing
R&D
and
Growth Investments
$3.5
Adj.
ROS
*
11.7%
SALES
($B)
ADJ. OPERATING INCOME
*
($M)
FREE CASH FLOW
*
($M)
+13%
2-YR CAGR
+25%
2-YR CAGR
$258
$334
$404
*Results are adjusted and from continuing operations; see reconciliations in appendix
2009
2010
2011
Adj. NI
FCF in excess of Adj. NI
•
Cash Generation
-
FCF >100% of Adj. Net Income
for 8 of Past 10 Years
-
36 Consecutive Years of
Dividend Increases
$207
$211
$248
+10%
2-YR CAGR
Clear Strategic Roadmap |
 PENTAIR
6
CURRENT STATE OF AFFAIRS
Solid Secular Demands …
Prioritized Investments
•
Secular Trends in Energy Efficiency, Sustainability and
Scarcity Continue to Drive Solid Demand
•
Growth Investments Reading Out
in Energy, Food & Beverage,
Fast Growth Regions …
Steady Industrial
•
Price/Inflation Dynamics Positive
... With Good Productivity
•
Anniversary CPT Acquisition in Q2 …
Nice Contribution to
Growth Expected in 2H of 2012
•
Western
Europe
and
Municipal
Headwinds
Continue;
Easier
Comparisons in 2H of 2012
•
Negative Impact from Foreign Currency Expected
Clear Strategic Roadmap |
 PENTAIR
7
STRATEGIC ROADMAP
Shareholder Value Creation is #1 Priority
•
Invest in Innovative Technology
& Application Expertise
•
Innovate
Around Scarcity, Energy
Efficiency and Sustainability
•
Continue to Build Scale in Fast
Growth Regions
•
Taking PIMS to the Next Level
and Leveraging New Rapid
Growth
Tool
STRATEGIC PRIORITIES
Clear Strategic Roadmap |
 PENTAIR
8
Safety, Quality, Delivery, Cost and Cash Focus
Attracting and Developing Top Talent
Prioritizing Investments & Innovation
Building Growth Capabilities
LEAN
ENTERPRISE
PENTAIR INTEGRATED MANAGEMENT SYSTEM
Executing Our Proven Strategy
Clear Strategic Roadmap |
 PENTAIR
9
STRATEGIC GUIDEPOSTS
Breadth and Expertise to Serve the “New”
New World
Industrialization
Infrastructure
Resource Scarcity
Quality of Life
>4 Billion Reaching
Middle Class Globally
Needs and Wants Are
Driving Demand
Increasing Population and Wealth
of the “New”
New World
Food
Infrastructure/Industry
(Transportation and Manufacturing)
Energy
Great Fit
& |
 PENTAIR
10
•
More Scale in Fast Growth
Regions
•
More High Growth,
Attractive Verticals
•
Strong from the Start …
Stronger in the Future
•
Strong Balance Sheet &
Steady Cash Flow
•
Better Positioned to Address
Global Trends
in “New”
New
World
Expect
$0.40
Accretive
to
2013
Adj
EPS
**
..
>$5/share
in
2015
WHY TYCO FLOW CONTROL
STRONGER, MORE BALANCED
~18%
~25%
Fast Growth Regions
% of Sales
<10%
~25%
Energy
Sector
% of Sales
~36%
~20%
Residential
Sector
% of Sales
~20/80
~45/55
Long/Short Cycle
Business
~2.6X
~1.6X
Debt to EBITDA
Ratio
BEFORE*
AFTER*
Great Fit
*
“Before” reflects standalone Pentair 2011 Sales, Debt and EBITDA; “After”
reflects combined proforma projected 2012 Sales, Debt and EBITDA; **Excludes Anticipated Transaction
Related Costs: Restructuring & Other; Transaction; and Noncash Inventory
Step-up and Customer Backlog Costs. |
 PENTAIR
11
Water & Environ.
Water & Fluid
Thermal Controls
Technical Products
Valves & Controls
Flow Control
STRONG STRATEGIC FIT
Complementary Capabilities to Best Serve Customers
PENTAIR
SALES BY SEGMENT
TYCO FLOW
SALES BY SEGMENT
COMBINED COMPANY SALES
2012 pro forma PROJECTED SALES ~$7.7B*
Water &
Fluid
Solutions,
~70%
Technical
Products,
~30%
Valves &
Controls,
~60%
Water &
Environ.,
~20%
Thermal
Controls,
~20%
Projected 2012 Sales: ~$3.7B
Projected 2012 Sales: ~$4.0B*
Technical
Products,
~30%
Water &
Fluid
Solutions,
~45%
Equipment
Protection
Solutions,
~25%
Flow
Control,
~30%
* Tyco Flow financials calendarized to December.
Great Fit |
 PENTAIR
12
SERVING HIGH GROWTH SECTORS
Driven By Strong Secular Growth Trends
Increased Scale in
Attractive Growth Sectors
DIVERSE VERTICALS
COMBINED 2012 pro forma PROJECTED SALES MIX
Industrial
Performance & Quality
Efficiency
Hazardous
Energy
Efficiency
Unconventional
Technology
Global Water
Scarcity
Regulation
Sustainability
Infrastructure
Aging
Capacity Needs
Urbanization
SECULAR TRENDS DRIVING DEMAND
Great Fit
* Energy includes Oil & Gas; Power and Mining.
Energy*,
~25%
Comm’l,
~10%
Infrastructure,
~10%
Industrial,
~35%
Residential,
~20% |
 PENTAIR
13
EXPANDED GLOBAL REACH
Fast Growth Regions ~25% of Combined Sales
~35%
DEVELOPED
REST OF WORLD
WORLDWIDE
>100 Manufacturing Facilities
>90 Service Centers
>30,000 Employees
Significant US Residential
Installed Base
US Industrial Sector Strength
Continued Global Increase
in Demand for Oil and Gas,
Power & Mining
Broader Offering, Recognized
Brands, Plus Service Centers in
Large, Fragmented Market
Rising GDP and
Urbanization Driving
Infrastructure, Energy &
Water Demands
Robust Industrial Sector
Greater Scale in Fast
Growth Regions Across
All Businesses
~25%
FAST GROWTH
REGIONS
Great Fit
* Energy includes Oil & Gas; Power and Mining.
Combined 2012 Pro Forma Projected
Geographic Sales Mix
~40%
US & CANADA |
 PENTAIR
14
•
Operating/G&A Cost Synergies: ~$160M pre-tax
–
Direct/Indirect Sourcing Opportunities
–
Lean/PIMS in Factories: Deploy in Tyco Flow
–
IT/Finance/HR Standardization
–
Management and Regional Business Integration
•
‘Day 1’
Cost Avoidance: ~$40M pre-tax
–
~$80M Public Company Corporate Cost Avoidance,
Net of ~$40M Integration/Corporate Investments
•
‘Day 1’
Annualized Tax Rate of ~24-26%
(Below the Operating Line)
•
Revenue Synergies …
All Upside Potential
–
Cross-Selling of Channels, Verticals, Products and Services
–
Not Assumed in Accretion and Cash Flow Forecasts
VALUE CREATION POTENTIAL
Corp Cost
Avoidance
Tax
Synergies
Cost
Synergies
Tremendous Day 1 Value From Corp Cost Avoidance + Taxes
RUN-RATE SYNERGY
ESTIMATE
Est. Transaction Related Costs of $360M
(~$220M is Non-Cash Inventory Step-Up and
Customer Backlog Costs)
~$200M
Operational
Synergies
pre-tax
ANTICIPATED SYNERGIES
Expected
Annualized
Tax Rate of
~24-26%
High Confidence in Synergies
‘Day 1’
Synergies |
 PENTAIR
15
COST SYNERGY DRIVERS
Expected Annual Cost Synergies of ~$200M by 2015
~$25M
~$20M Direct
~$40M Indirect
Proven PIMS Strategy
–
$25M
by
Year
3
(Lean,
Distribution,
&
Warranty)
–
Reinvesting in Lean Talent Yr 1 & 2
Realistic Sourcing Assumptions
–
Scale, Geographic Reach, and Standardization
–
Manufacturing
Footprint
Rationalization
Not
Incl.
~$115M
Good Visibility
–
½
Cost Avoidance; ½
Standardization
–
Standardization of Accounting, ERP’s,
Global Structure, Payroll, and IT Applications
–
Includes ~$20M Integration Team Investment
ANTICIPATED OPERATIONAL
COST
SYNERGIES
pre-tax
~$90M
~$150M
~$200M
Global
Structure:
G&A,
Selling/
Marketing
Ops/
Lean
Direct/
Indirect
Sourcing
2013
2014
2015
High Confidence in Synergies
‘Day 1’
Cost
Synergies |
 PENTAIR
16
16
16
Core Capabilities …
Leverage Existing Playbooks
PROVEN PENTAIR CAPABILITIES
•
ERP Platforms
40+
15
>60%
•
Data Centers
40+
6
>85%
•
HR Processes
850+
~35
>95%
•
Payroll Centers
35+
18
>45%
•
Accounting Centers
50+
27
>45%
2007 2011*
•
Core Business Potential
Example: Doubled Technical Products
Op Margin in 10 Yrs to 18%+ with
Further Opportunities to Drive
Productivity Improvements
Est. ~$70M of
Savings
’07
–
‘11
…
Further Potential
w/CPT, Tyco Flow
High Confidence in Synergies
STANDARDIZATION
LEAN ENTERPRISE
Improvement
* Excludes CPT Acquisition.
•
Year 1 Benefits in Acquisitions
Meaningfully Improved Lead Times,
Freed Up Manufacturing Space,
Reduced Inventory Levels …
Helped
‘Fund’
Lean Leaders/Training in Every
CPT & Hidro Filtros Facility |
 PENTAIR
17
REVENUE OPPORTUNITIES
Significant Potential …
Not
in Synergy/EPS Targets
High Confidence in Synergies
•
Cross-Selling Across the Global Enterprise
–
Protective Enclosures, Thermal, Valves & Controls, Process Technologies,
Water Purification, Flow Technologies, Water & Environmental Systems,
Aquatic Systems
•
Greater Fast Growth Region Presence
–
Tyco Flow Adds Immediate Scale in Emerging Markets
•
Technology Innovation with Greater Customer Reach
–
Pentair’s
Filtration & Flow Technology …
Tyco Flow’s
Global & Customer Reach
–
Tyco Flow’s
Valves, Controls & Thermal Technology …
Pentair’s
Customer & Channel Reach
•
Extend Service Footprint to Grow Aftermarket Revenue
–
Extend Tyco
Flow’s >90 Service Centers and >1,100 Service Technicians
Globally to Pentair Systems and Solutions |
 PENTAIR
18
18
INTEGRATION PRINCIPLES
•
Lock & Load on Short, Medium and Long-term Deliverables
“Day 1–100”
Business Continuity & Fast Start
“Day 500”
Growth & Cost Synergies Realized …
Organization in Rhythm
“Day 1,000”
$10B+ Global Leader …
One Company Culture
•
Ensure Base Business Results of the 8 GBU’s Are Delivered
•
Ensure We Achieve Targeted Cost Synergies (base + synergies = 2015
targets) •
Elevate Functional Capabilities to Manage a Global Company
•
Manage Potential Risks (Competitors, Tax, Compliance)
•
Build a Pipeline of Growth Opportunities to Deliver Upside
•
Choose
&
Go
…
Standard
Processes
&
Critical
Activities…
Applied
Quickly
Over 30,000 Employees Focused On Delivering Value
Integration Planning |
 PENTAIR
19
INTEGRATION APPROACH
19
19
Enhance PIMS and Drive Across All Businesses
Leverage & Expand
PIMS Toolkit
Fully Train, Fully Adopt & Expand
8 Global
Business Units
Choose Quickly & Go
~50/50 Pentair/Tyco Flow
(~$160M after Corp Cost Avoidance)
Drive Standardization
Opportunity
Avoid, Leverage &
Reduce Costs
Integration Planning |
 PENTAIR
20
20
•
1 GBU
–
Valves & Control
•
~30% Fast Growth
•
Growth Opportunities:
Energy & Industrial
Process
•
Standardization Synergy
Opp’ty:
~200 bps of ROS
8 GBU’s With Attractive Growth Opportunities
RUN AS 8 GBU’s (In 3 Reporting Segments)
Equipment Protection Systems
~$1.9B*
Flow Control
~$2.5B*
Water & Fluid Solutions
~$3.3B*
•
5 GBU’s
–
Flow Technologies
–
Process Technologies
–
Aquatic Systems
–
Water & Environmental
Solutions
–
Water Purification
•
~25% Fast Growth
•
Growth Opportunities:
Water Reuse, Energy
Efficiency, Food and
Beverage & Infrastructure
•
Standardization Synergy
Opp’ty:
~250 bps of ROS
•
2 GBU’s
–
Technical Products
–
Thermal
Solutions
•
~20% Fast Growth
•
Growth Opportunities:
Energy, Industrial &
Infrastructure
•
Standardization Synergy
Opp’ty: ~150
bps of ROS Integration Planning
* Tyco Flow financials calendarized to December; Combined Projected Pro Forma 2012 Sales
|
 PENTAIR
21
21
8 GBU’s With Strong Growth and Income Potential
SYNERGY PLANNING
Integration Planning
•
Direct Sourcing; ~$20M by 2015: Looking to Drive Upside, needs to be
managed by Commodity,
By
Business,
By
Localized
Region
(~20
bp’s
of
improvement
by
2015)
•
Global Selling/Marketing + Indirect Sourcing; ~$35M by 2015 : Includes
Fast Growth Facility & Organization Opportunities, Reduction in Printed
Collateral, Alignment of Tradeshows, Brand Rationalization and Positioning, Cross
Selling, Customer Care, & Developed Sales Office Consolidation and Structure across 8
GBU’s and over 200 sales offices
(~40
bp’s
of
improvement
by
2015)
•
Corporate; ~$45M by 2015: Almost Complete with New Pentair Budget … on Track and
Expanding Capability to Serve a ~$10B Global Company
•
Lean & Operations + Indirect Sourcing; ~$35M by 2015: Includes
Warranty, Scrap, Facilities Costs, Utility Costs, SKU Rationalization,
Distribution, Excess & Obsolete, Delivery across ~100 Factories and ~90 Service
Centers … (~40 bp’s of improvement by 2015)
Does Not Yet Include Factory Consolidations
•
Global G&A + Indirect Sourcing; ~$65M by 2015: Includes Fast Growth
Shared Support, Reduction of ~40 ERP’s within the GBU’s, Standardization
of >50K Software applications, standardization of payroll, credit, collections,
payables, IT infrastructure, mobile devices, other
indirect
spending,
audit
fees
&
statutory
fees
and
structure
(~130
bp’s
of
improvement by 2015) |
 PENTAIR
22
TIMELINE
Solid Progress …
On Track to Close End of September
•
Filed Preliminary S-4
•
Early Termination on Hart-
Scott-Rodino
•
Named Integration Leader;
Held Planning & Kick Off
Meeting
•
Began Functional Work
Stream Planning (detailed level)
•
Identified Business Leaders
•
Defined Reporting Structure
•
Final S-4 and Proxy
Statement Filing
•
Obtain Other Regulatory
Approvals (EU, other foreign jurisdictions)
•
Pentair and Tyco International
Shareholder Approval
•
Project by Project detailed
Synergy Plans with
Accountable Owners
Execute On 2012 Strategic
Execute On 2012 Strategic
Priorities & Targets …
Priorities & Targets …
Retain Talent
Retain Talent
Integration Planning
COMPLETED (~60 DAYS)
NEXT STEPS (~180 DAYS) |
 PENTAIR
23
23
KEY MILESTONES
Integration & Standardization …
With Priorities
•
Day One Synergies
•
Business Continuity
•
People & Communications
•
Integration Playbook
•
Day 1 Synergies + Path Forward on Year 1
•
Maintain Business & Customer Focus
•
Energized Workforce …
Positive & Focused
•
Frame Revenue Synergies
•
Growth & Cost Synergies
•
PIMS Adopted & Elevated
•
Functional Standards
•
Integration Standardization
•
Maximize Growth & Cost Opportunities
•
Operationally & Culturally One Company
•
Elevating Our Capabilities in Each Function
•
Standardized / Repeatable Programs
•
Deployed Global Processes
•
Standardization & Culture
•
Leading Global Practices
•
Identify & Incorporate New Processes
Integration Planning
CONTINUITY & FAST START
GROWTH + STANDARDIZATION
LEADING GLOBAL PROCESSES
‘First 100 Day’
Plan
‘Day 500’
Plan
‘Day 1,000’
Plan |
 PENTAIR
24
SUMMARY
Positioning ‘New’
Pentair for Sustainable, Profitable Growth
Clear Strategic Roadmap
for Shareholder Value Creation
Integration Planning
Efforts Well Underway
High Confidence
in Deal Synergies and Long Term Targets
Pentair and Tyco Flow Control …
Great Fit |
 PENTAIR
Questions?
Thank You |
 PENTAIR
26
APPENDIX
GAAP to Non-GAAP Measurements & Reconciliations |
 PENTAIR
27
REPORTED TO ADJUSTED RECONCILIATIONS
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" years ending December
31, 2011, December 31, 2010 and December 31, 2009 to the
"Adjusted" non-GAAP excluding the effect of adjustments (Unaudited)
Year
Year
Year
In millions, except per-share data
2011
2010
2009
Net sales
3,456.7
$
3,030.8
$
2,692.5
$
Operating
income - as reported
168.5
$
334.2
$
219.9
$
% of net sales
4.9%
11.0%
8.2%
Adjustments:
CPT deal related costs
8.3
—
—
Restructuring and asset impairment
12.9
—
37.9
Inventory step-up and customer backlog
13.4
—
—
Goodwill impairment
200.5
—
—
Operating income -
as adjusted
403.6
334.2
257.8
% of net sales
11.7%
11.0%
9.6%
Net income from continuing operations attributable
to Pentair, Inc. -
as reported
34.2
197.8
115.5
Adjustments net of tax
206.5
—
26.2
Bond tender
—
—
3.2
Net income from continuing operations attributable
to Pentair, Inc. -
as adjusted
240.7
197.8
144.9
Continuing
earnings
per
common
share
attributable
to
Pentair,
Inc.
-
diluted
Diluted earnings per common share -
as reported
0.34
$
2.00
$
1.17
$
Adjustments
2.07
—
0.30
Diluted earnings per common share -
as adjusted
2.41
$
2.00
$
1.47
$
|
 PENTAIR
28
GAAP TO NON-GAAP RECONCILIATION
Pentair, Inc. and Subsidiaries
Reconciliation of Free Cash Flows for the years ending December 31,
2011, December 31, 2010 and December 31, 2009 (Unaudited)
In millions
2011
2010
2009
Free Cash Flow
Net cash provided by (used for) continuing operations
320.2
$
270.4
$
259.9
$
Capital expenditures
(73.3)
$
(59.5)
$
(54.1)
$
Proceeds from sale of property and equipment
1.3
$
0.3
$
1.2
$
Free cash flow
248.2
$
211.2
$
207.0
$
Pentair and Subsidiaries
Reconciliation
of
the
GAAP
"As
Reported"
Operating
Income
to
the
"Adjusted"
EBITDA
for
the
years
ending
December
31
(Unaudited)
Pro Forma *
In millions
2011
2012
Operating income -
as reported
168.5
$
580.0
Adjustments:
Deal related costs and restructuring
21.2
130.0
Inventory step-up and customer backlog
13.4
160.0
Goodwill
200.5
—
Operating income -
as adjusted
403.6
870.0
Depreciation and amortization
108.1
275.0
EBITDA
511.7
$
1,145.0
$
* The pro forma information includes a full
year of Tyco Flow financials (calendarized to a December 31 year-end).
as if the merger took place on January 1, 2012.
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